Puerto Rican financial institution Popular (NASDAQ:BPOP) missed Wall Street’s revenue expectations in Q4 CY2025, but sales rose 8.5% year on year to $820 million. Its non-GAAP profit of $3.40 per share was 11.6% above analysts’ consensus estimates.
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Popular (BPOP) Q4 CY2025 Highlights:
- Revenue: $820 million vs analyst estimates of $825 million (8.5% year-on-year growth, 0.6% miss)
- Adjusted EPS: $3.40 vs analyst estimates of $3.04 (11.6% beat)
- Adjusted Operating Income: $259.4 million vs analyst estimates of $332.7 million (31.6% margin, 22% miss)
- Market Capitalization: $8.71 billion
StockStory’s Take
Popular’s fourth quarter was met with a positive market response, reflecting management’s progress in expanding net interest income and maintaining expense discipline. CEO Javier Ferrer-Fernández credited strong commercial and mortgage loan growth in Puerto Rico, improved net interest margin, and lower operating expenses as primary contributors. Management noted that stable credit quality and strategic cost initiatives supported improved profitability. Ferrer-Fernández highlighted ongoing investments in digital origination platforms and branch modernization, which contributed to better customer engagement and operational efficiency during the quarter.
Looking ahead, management’s forward guidance emphasizes continued growth in commercial lending and a disciplined approach to expense management. Ferrer-Fernández stated that Popular expects modest loan growth, particularly in commercial and mortgage segments, while remaining cautious on consumer lending due to softening demand. The company plans to focus on expanding core deposit relationships, further digital transformation, and optimizing capital levels. CFO Jorge Garcia noted, “We anticipate net interest income will benefit from asset repricing and deposit cost management, though at a slower rate than the past year.”
Key Insights from Management’s Remarks
Popular’s fourth quarter performance was shaped by improved net interest margin, robust loan growth, and sustained cost controls, alongside investments in digital platforms and modernization of its retail network.
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Commercial and mortgage loan growth: Management identified commercial and mortgage lending in Puerto Rico as key drivers, with both segments contributing significantly to overall loan growth. The expansion was largely attributed to healthy demand in the local economy and targeted initiatives to deepen customer relationships.
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Digital origination platform rollout: The launch of a new consumer credit origination platform in Puerto Rico and The Virgin Islands enabled more streamlined, fully digital loan and credit card applications. This move resulted in higher online originations and improved overall customer experience.
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Expense discipline and efficiency initiatives: Sustained focus on expense management and operational simplification helped keep operating expenses below earlier expectations. Management highlighted efficiency projects such as the exit from the U.S. mortgage business and an ERP system transformation as contributors to cost control.
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Stable credit quality: Credit metrics remained steady, with non-performing loans and net charge-offs decreasing compared to the previous quarter. Management attributed this to strong underwriting standards and a stable macroeconomic environment in Puerto Rico.
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Capital and shareholder returns: The company increased its quarterly dividend and continued share repurchases, citing strong capital ratios and tangible book value growth. Management emphasized that capital return decisions are balanced with ongoing investment in technology and operations.
Drivers of Future Performance
Popular’s outlook for the next year centers on commercial loan growth, disciplined cost control, and digital transformation, tempered by cautious expectations for consumer lending and ongoing investment in technology.
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Commercial and mortgage lending focus: Management expects commercial lending in Puerto Rico and select U.S. markets to drive loan growth, while consumer lending—especially auto—faces softer demand. Mortgage activity in Puerto Rico is projected to remain resilient due to healthy housing demand and ongoing public and private investment.
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Deposit and funding strategy: The company will concentrate on growing core deposit relationships, especially in commercial and small business segments. Management believes that maintaining low-cost deposits and reducing reliance on higher-cost U.S. funding will be critical to sustaining net interest margin expansion.
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Expense and technology investments: Ongoing investment in digital platforms, including ERP upgrades and channel modernization, will continue. Management anticipates a moderate increase in expenses as technology projects progress, while ongoing efficiency efforts are designed to offset inflationary pressures and support long-term profitability.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be closely monitoring (1) the pace and quality of commercial and mortgage loan growth, (2) Popular’s ability to grow and retain core deposit relationships while managing funding costs, and (3) the execution and results of ongoing digital transformation initiatives. Any significant developments in Puerto Rico’s economic environment or shifts in asset quality will also be critical indicators of management’s ability to deliver sustained profitability.
Popular currently trades at $130.54, up from $122.87 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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